TESTIMONY OF ROBERT L. OSTERTAG
BEFORE THE ABA'S COMMISSION ON
October 9, 1999
Good morning. Thank you for affording me the opportunity to be heard on this most important of issues confronting our profession. I believe it to be the most important issue that has confronted us in this century, and as you know, the century has just 82 more days of life.
I am aware, of course, that the House of Delegates has recently put this Commission's MDP report and recommendations somewhat on hold. I assume, however, that your recommendations are not yet dead, and that they can yet be amended and resubmitted upon terms consistent with the House's August resolution, or that they may be totally replaced by a new report and set of recommendations that may incorporate some of the old, or that this Commission may turn down an entirely new road with entirely new recommendations. Certainly the Commission lives; obviously, therefore, it has some future purpose.
In anticipation that some portions of the existing report and recommendations may resurface, I would like to address them. I hope my remarks are not academic.
My name is Robert Ostertag. I am a small firm general practitioner from Poughkeepsie, New York. I have actively practiced my profession for 42 years and have been an active - indeed, a very active - member of this Association for the past 20 years. I am an adjunct professor of law at the Fordham University School of Law in New York. I am also a past president of the New York State Bar Association and am currently a member of its Special Committee on the Law Governing Firm Structure and Operation, which is someone's idea of an acronym for Multi-Disciplinary Practice - 2, since we have already had a prior Committee on Multi-Disciplinary Practice. Our Special Committee is chaired by Robert MacCrate of New York, a former president of both the New York State and the American Bar Associations and, I'm sure you will agree, an icon of this profession.
I currently chair the Senior Lawyers Committee of this Association's General Practice, Solo and Small Firm Practitioners Section as well as the Solo and Small Firm Committee of this Association's Senior Lawyers Division (a little incest there), and I recently chaired the New York State Bar Association's Special Committee on the Future of the Profession. As you can see from just that short list, I have been very heavily involved in organized bar activities for many more years than my partner wishes me to recall.
I speak only on my own behalf, but I echo the sentiments I've heard consistently from many colleagues throughout the country, indeed, almost unanimously, since the subject of multi-disciplinary practice raised its ugly head.
I must express to you my own personal profound disappointment with this Commission's report and recommendations on the subject of multi-disciplinary practice. Given the realities of the world in which we live and practice, the report and recommendations are, in my judgment, severely flawed. And I suppose you are quite aware of what clearly appears to be the disappointment of an overwhelming majority of those practitioners around the nation who are familiar with the issue. By indirection, at least, the concept has been voted down resoundingly by this Association's representative House of Delegates, by the New York State Bar Association's representative House of Delegates, and perhaps by other such bodies as well, or very likely will be. If there were 180 delegates voting in Cooperstown, New York, at the New York State Bar Association's House meeting last June, I'd be surprised if more than eight of them supported the concept. And all eight of its supporters, I believe, were from New York City megafirms.
The fact that multi-disciplinary practice is "already with us", and that a multitude of people, including some attorneys, are already in violation of the nation's unlawful practice statutes, as this Commission has correctly observed, is, in my mind, not sufficient cause to bend in the face of proposals that clearly are not in the public interest, nor in the interests of our clients with but very few possible isolated, fact-intensive exceptions, and, if I may say, not in this profession's interests as well. This is clearly not the issue, nor the time, for appeasement.
I've been told dozens of times not to be protectionist on this issue, for the public will not be supportive of such conduct. Well, I am protectionist from my own little corner of the globe. I am free to be protectionist. I respect and revere this profession. I am a voice that for years has sought to address the particular needs of solo and small firm practitioners. That has become my niche in the organized bar. I am reasonably well known and, I believe, reasonably well respected. I am a voice that is recognized by many, and I must confess to using it with increasing frequency on the issue of multi-disciplinary practice over the past number of months.
Should multi-disciplinary practice be approved and adopted, what I see for solo and small firm practitioners throughout the nation is what you and I have witnessed in connection with the demise of our nation's neighborhood bookstores at the hands of Barnes & Noble, and Borders, and others, and what you and I may also observe at the moment with the demise of our neighborhood drugstores at the hands of the major pharmaceutical companies throughout the nation. The vision is clear to me that our nation's solo and small firm practitioners will be gobbled up - not even by its own colleagues in larger, controlling practice settings, but by outsiders, the insurers, the realtors, the environmentalists, and whomever, not to mention Sears, Montgomery Ward, K-Mart and the like, all of whom are waiting, and waiting, and waiting, smacking their lips in anticipation.
Solo and small firm practitioners, meaning those in practice settings of 1 to 5 attorneys, comprise some 63%, almost 2/3, of the entire privately practicing bar in this nation. We are a large majority. Until recently, however, we've been of little or no significance to this Association which, almost exclusively, has traditionally represented the interests of what I've heard many of my colleagues refer to as the "fat cats" of the profession, and which, in the minds of many, still does - witness, in their collective opinion, this Commission's recommendations on this subject. It is those among us who practice in large and mega-firm settings who are the minority, albeit traditionally the economically and politically powerful minority within this Association, some of whose bottom-line interests, concededly, but almost exclusively, might stand to benefit from multi-disciplinary practice. It is some, but not even all of them, of course, who, to some degree or another, are supportive of MDP. And yes, I am aware that this Association's General Practice, Solo and Small Firm Section has deigned to support the concept of MDP, at least implicitly. Frankly, I don't know what they were thinking about - certainly not their constituents. I suspect their support has its foundation in the Section's economic base, some of which is financed by outside sources which are themselves supportive of MDP.
I must confess, again on a personal note, that I sometimes wonder who the American Bar Association represents and how it survives. I've heard that sentiment over and over and over again throughout the years from hundreds and hundreds of practitioners throughout the nation with whom I've had contact by reason of my own active participation within the ABA. I fear that practitioners around the country - and the majority of practitioners around the country have chosen not to be members of the ABA - consider the ABA to be part of their problem and not part of the solution. I find that very sad.
I understand this Commission's recommendation to the House of Delegates to provide in essence, and in part, that our profession should adopt and maintain rules of conduct that protect its core values while at the same time not permitting those core values "unnecessarily" to inhibit the development of new structures "for the more effective delivery of services and better public access to the legal system." What "more effective delivery of services" has the Commission in mind? What "better public access to the legal system" has the Commission in mind? Does our legal system currently suffer from an inability effectively to deliver legal services to clients because it does not operate within a multi-disciplinary practice setting? I know of no hard evidence of that. Does the public now suffer from inaccessibility to the legal system brought about by the absence of multi-disciplinary practice? I know of no hard evidence of that, either. Does anyone here really, truly believe in his or her heart of hearts that ineffectiveness or inaccessibility, if, in fact, either exists, can be cured in whole or in part by our submission to multi-disciplinary practice? I see no evidence to suggest it, and I've been looking.
The major law firms of this country, I'm sure, would never admit to their ineffectiveness in the delivery of legal services, or to the public's inaccessibility to them, as well they shouldn't in point of actual fact. They might choose to represent that they could improve the delivery of legal services and create better public access through multi-disciplinary practice, but I must ask how? Does it mean that lawyers and non-lawyers sitting around a conference table can better function than lawyers and non-lawyers not sitting around a conference table? When have lawyers and non-lawyers not sat around conference tables as the need has arisen? When have they not been able to work together, in common, and for a common cause, in representing a common client where the facts and client interests have permitted? If there is a "convenience" factor in mind, whose convenience are we talking about? I think we all know the answer. It's not the public's convenience which, it is said, clamors for "one stop shopping." There is no plausible evidence of that, either. The convenience factor we're talking about is a manufactured element of the Big 5's financial goals. It is they, not likely anyone else, who are inconvenienced.
The real inconvenience for the so-called "full service firms" (formerly known as accountants, but no longer wanting to be) is that we lawyers are not beholden to them, and we sometimes get in their way because the interests of our clients, which are paramount to us as attorneys, are sometimes different from those of our so-called "full service firm" friends, or from their approach to problems, or from the goals they hope to attain.
Rather than constituting a weakness within the system, I suggest to you that the current arrangement represents strength, for we lawyers have a core value to which we uniformly adhere, or are supposed to, called "undivided loyalty to clients." Indeed, we do sometimes get in the way. No question about it. We are independent - another core value. Indeed, that may sometimes affect the so-called "full service firms'" bottom lines, and that's not convenient for them. Rather, it's troublesome to them. I suggest to you, however, that that's how it should be when our legal clients' interests demand it, and multi-disciplinary practice, as the ABig 5" would impose it upon us, is clearly not in our clients' interests.
I understand the Commission's recommendation also to be that a lawyer acting in accordance with a non-lawyer supervisor's resolution of a question of professional duty should not thereby be excused from failing to observe the rules of professional conduct. This Commission has already noted that there are a multitude of attorneys throughout the nation practicing within nontraditional settings, who are indeed already violating our Codes of Professional Responsibility by practicing law in such settings, but lying about it. What makes anyone believe that that will change? And what makes anyone believe that when a lawyer practicing within a multi-disciplinary firm setting is instructed by his or her non-lawyer supervisor to assume a legal position that he or she knows is not in his or her client's best interests, but is, in fact, in the best interests of his or her supervisor, or the employing multi-disciplinary firm, or others involved in the transaction, that he or she will not do as he or she is doing right now, and that he or she will not do as he or she is directed to do in deference to his or her continued employment, particularly if the lawyer has children in college, or who are about to be enrolled, or has other economic or personal concerns? Perhaps that observation sounds cynical. But human nature is what it is, and again, many hundreds of lawyers employed by so called full service firms are already misrepresenting what they do as this Commission has correctly observed. Obviously they are taking instructions from their superiors or they wouldn't be lying about what they're doing. This is not a fairyland. We're talking about the real world, and real people, subordinate in rank, who have economic needs of their own.
The same observation applies to the Commission's recommendation that a lawyer in an MDP should not represent to the public, or to specific clients, that the services he or she provides are not legal services when, in fact, they are. I assume that recommendation was included precisely because the Commission is aware that misrepresentation is already happening, and in large doses.
I understand the Commission's further recommendation to be that as a condition of permitting lawyers to engage in MDP, the firm should be required to give to the highest court within its jurisdiction a written undertaking to the effect that it will not directly or indirectly interfere with a lawyer's exercise of independent professional judgment, and that it will establish, maintain and enforce procedures designed to protect a lawyers exercise of independent professional judgment. I assume the Commission was serious. Can you imagine Joe Novice, a lawyer fresh out of law school, even my own law school which imparts to its graduates the highest of moral and professional standards, jeopardizing his or her employment and professional future for the sake of an ethical standard, a principle, some esoteric set of words under the circumstances, which, if he or she adheres, will not be crushed, along with him or her, and his or her employment status, by this 18-wheel non-legal multi-disciplinary tractor trailer barreling down the highway at him or her with instructions appropriate to its own bottom line? Is anyone really to believe that such a firm would adhere to such a commitment where, upon completion of a corporate merger or acquisition transaction involving multi-national or national organizations and millions of dollars, it stands thereafter to gain employment retention that may bring it millions of dollars in income of its own over future years? Is anyone really to believe that non-lawyer members of MDPs will abide by rules of professional conduct referable to third or fourth tier staff lawyers where the real issue is the market place, the market place, the market place, and not rules of ethics and professional niceties?
I understand the Commission's further recommendation to include a provision that MDPs should respect the unique role of lawyers in society, and their unique obligation to render voluntary pro bono legal service to the poor. In New York alone, lawyers provide more than 300 million dollars worth of free legal service annually, totally voluntarily, directly to the poor. 300 million dollars worth, in New York State alone. That does not include the multitudes more of free legal service they render on behalf of hospitals, churches, other charitable causes, service organizations, local governments and whomever. Accountancy and indigency are totally inconsistent concepts. I must confess not ever to have known a poor or indigent person to have retained the services of an accountant, or to have found need to do so. The two are like water and oil. Does the Commission really believe that Arthur Anderson & Company, or KPMG, have even the remotest interest in committing their financial resources, or the time and effort of their employees - any of them - to act in the free service of a constituency they have never served and in which they have no interest and historically never have? I suggest to you that the term pro bono service, when it comes to the poor or the indigent, is not even within their lexicon in this real world in which we live and in which we operate.
And are we really to believe that MDPs will annually review their procedures to ensure their conformity to our ethics rules when in fact they have no interest in our ethics rules, or in insuring their effectiveness, or, indeed in effectuating them?
And why would the courts of this country want to assume what might well become a potentially monumental administrative burden, particularly in our urban financial centers, of reviewing and conducting audits of MDPs when they are already crushed with work and, for the most part, underfunded in their efforts to accomplish what is already their constitutional burden? I can't speak for every state, but I suggest to you seriously that you'd probably have a tough time selling that concept to New York State's Unified Court System, to its Chief Judge, and to its Office of Court Administration.
I found it interesting that shortly following the release of the Commission's proposal last June, the AICPA adopted its resolution of July 15, 1999, applauding the ABA and its Commission for addressing the concept of multi-disciplinary practice, but advising them also that what the Commission had recommended was not exactly what they had in mind. What they had in mind, of course, was a form of unilateral concession from the legal profession, a total redesigning of our Codes of Professional Responsibility to conform to what they wish MDPs to be. And who are the movers? They are, indeed, the Big 5, and, of course, the various anti-lawyer groups around the country which, in their ignorance about what we do, how we do it, and why, have always sought to eliminate us as a profession, or somehow to impose their form of regulation upon us.
Multi-Disciplinary Practice is market driven. It's the bottom line, their bottom line, for the benefit of which we are asked to compromise our core values. Our core values, however, are uniquely addressed to the interests of our clients, and they require undivided loyalty to them, our protection of their confidences and secrets (and who among us will jeopardize our employment with an MDP when told by our supervisor to hand over that file), and they require as well total independence from any outside influence in the implementation of those standards and the representation of our clients.
Aside from the usual Code references cited on this subject, Model Rules 1.2(a) and (b) speak to the obligation of a lawyer to abide by a client's decisions concerning the objectives of representation. DR 7-101(A)(1) speaks to a lawyers obligation not intentionally to fail to seek the lawful objectives of his client through reasonably available means. EC 7-7 states, among other things, that the authority to make decisions is entirely that of a client. And EC 7-8 recites in substance that in the final analysis, lawyers should always remember that decisions whether to forego legally available objectives or methods because of non-legal factors are ultimately for clients and not for their lawyers to make. The accountants' Code of Professional Conduct is inconsistent with those concepts. Accountants, as you know, are responsible to the public, certainly in their audit function, but indeed elsewhere as well as a mere examination of the AICPA's Code '102 and its related provisions make clear. How can we reconcile those concepts? And again, it is they, the Big 5, solely for market purposes, who wish us to reconcile our concepts. This Commission's recommendations of June 14th clearly are not exactly what they had in mind, and what they want you to do is to clean them up.
In the real world, how can the other side be expected to conform to any standards, compromised or not, that we now or by amendment may impose upon our own colleagues? We are who we are - they are who they are. I must admit, after having carefully read your recommendations, that I wondered, tongue in cheek, whether this Commission had devised some diabolical scheme that it knew from the beginning would lead nowhere, either among our own colleagues or at the doorstep of the other side, and that its proposals were really something of a prank. I suppose I'd have enjoyed that. But I know better, of course, because you are all serious people bent on addressing a serious subject.
I'd respectfully suggest that multi-disciplinary practice is not in the best interests of the public or of our clients, and that's our bottom line. Nor is it in the best interests of this profession which to me, at least, may not be the bottom line, but which is pretty close. If we already have MDP in practice, which the Commission has concluded we do, and if we have lawyers out there who are misrepresenting themselves and what they do, already in violation of the various Codes of Professional Responsibility that apply to them, and if we have others out there who are unlawfully practicing law, which we do, I suggest that it is time - indeed, long past time - for us to address those problems and not to recoil from them as we have for years and decades for fear that some court somewhere will take away our monopoly. If our monopoly is not in the public's best interest, as we believe it is, and if it is not acceptable in the present societal scheme of things, so be it. But if the core values of this profession have any meaning in our society, developed formally as they have been over almost a century now of time, and informally over more than two centuries and, arguably, historically beyond, then those core values must be preserved within our society, and we must protect and defend them, just as every constitutional right or privilege that we have as citizens of this nation have been preserved, protected and defended by, you know who, lawyers.
In closing, while I am in complete disagreement and profoundly disappointed with the Commission's proposals and with the timorous stance adopted by some within both the organized bar and the profession as a whole, I wish to commend you all for sticking your chins out, for attempting seriously to address this important issue, and for exposing yourselves to criticism such as my own, and abuse, and all the stuff that goes with it. I've been there, and I appreciate your willingness - indeed, your bravery, and your resolve. Not everyone would have been willing, and the issue must be addressed. The battle, I believe, is merely beginning. We
can't sit still and merely react. The Big 5 are themselves resolute, and extremely well-funded. They want control, including legal control of everything in which they involve themselves - why else would they be pushing for this - and they want your dollars and mine. And they want, finally, to become the "full service firms" that they tout themselves as being, but that they are not.
Thanks so much for taking the issue on, and thanks so much for allowing me to express my views.